Explaining Income Inequality in Brazil: Age, Period and Cohort Effects
Pesquisa e Planejamento Econômico, Vol. 33, No. 2, August 2003
Posted: 21 Jan 2005
Using Brazilian household survey data, this paper aims to contribute for a better understanding of the income inequality evolution from 1981 to 2001. This is done by decomposing the time evolution of the income inequality among Brazilian households into age, time and cohort effects. Identification of these effects follows as an application of the method proposed by Deaton and Paxson (1994) to a series of Theil-T inequality indexes of overall family income and earnings for the whole sample of household heads, as well as for schooling groups.
The main results are: a) income and, more pronouncedly, earnings, are more unevenly distributed among families belonging to the youngest generations; b) the cohort effect is not important among families whose heads have similar levels of schooling, which suggests that the rise in inequality among younger cohorts is a result of the increase in schooling levels along the last decades; c) large positive age effects are present, especially for groups with higher schooling levels; d) income inequality tends to decrease after a certain age for groups with low education; and e) peaks in income inequality were observed in 1989 and 1993, probably due to sharp increases in inflation.
Keywords: Inequality, distribution, micro-simulations
JEL Classification: O1, J1, I3
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